Danone's outlook for the year sours amid economic turmoil in Europe

 
Sarah Spickernell
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Outlook is lower than it was this time last year (Source: Getty)
Danone didn't do badly last year, but even yoghurt isn't immune to the economic and political tensions of Europe.

The figures

Full-year revenue for Danone in 2014 was €21.1bn (£15.5bn), largely in line with the company's estimates.
Similarly, its full-year sales growth of 4.7 per cent will cause no alarm – although it was slightly towards the lower end of the 4.5-5.5 per cent range predicted in October.
Prospects seemed to brighten more in the fourth quarter, however, as sales increased by 7.5 per cent, which beat forecasts of seven per cent.
But the apparently positive results have not lifted forecasts for 2015, with outlook lower than it was for 2014. Danone said it expects only “slight growth” with sales expected to rise between four and five per cent on a like-for-like basis.
"We anticipate an ongoing difficult and unstable environment," said Emmanuel Faber, the company's chief executive.

Why it's interesting

The French dairy company hasn't had a bad six months up until now, with positive fourth quarter results indicating an upward trend for the multinational business. Share price, which is up almost €10 compared with this time last year, tells a similar story.

But economic tension in the Eurozone, heightened recently by the possible exit of Greece from the single currency zone, is causing difficulties for Danone in the region.
However, things are going well beyond Europe's shore, as results reveal some progress in Asian and African markets. While annual sales rose just two per cent in Europe, they rose 7.4 per cent in emerging markets.

What Danone said

In a statement, Danone said:
Danone assumes that economic conditions will remain difficult and unstable overall, with fragile or even deflationary consumer trends in Europe, emerging markets undermined by volatile currencies, and difficulties specific to a few major markets.

In short

While deflationary pressures hold back market opportunities for Danone in Europe, its sales elsewhere are growing. The company's fourth-year results shed a positive light on its prospects abroad, but outlook for 2015 has failed to live up to its 2014 level.

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